Making the case against UGOE

In January 2015 the Scottish Government announced a moratorium on granting consents for unconventional oil and gas developments in Scotland whilst further research and a public consultation is carried out. While many people seem to think that UOGE (often popularly referred to as fracking) has been banned in Scotland, it is only 'on pause' as the government considers potential impacts in a range of areas.

In October 2015 the Scottish Government announced consultation themes to inform decision making in relation to the moratorium on UGE in Scotland. The Broad Alliance was given an opportunity, but no resources, to make its own submissions. In a unique citizens' research and writing project, we have made sure that the community case against UOGE is clearly stated. You can click on each topic to read our view:

A separate study was established by the Scottish government to look at the form of UOGE called Coal Bed Gasification and the Broad Alliance made a submission to this.

When the evidence-gathering is complete, the Scottish Government has guaranteed an extensive public consultation. The Broad Alliance is calling on ordinary people in communities across the country to inform themselves fully, and to use the opportunity to make their views clear.

Climate Change Impact of Unconventional Gas Extraction in Scotland

1. THE ‘TRANSITION’ ARGUMENT

Broad Alliance views investment in a UOGE fossil fuel industry as an unsustainable shift away from investment in renewable energy. A transition from fossil fuel use to renewables would be made much more difficult by having a new fossil fuel industry established.

SGIESPR (2012) is frequently cited by UCG advocates for evidence of its green credentials, but more careful reading of it includes the following points:

6.67 While the use of gas may bring a benefit through replacing coal use, there is a longer term risk that investment in gas, particularly gas power generation, will replace investment in lower-carbon renewable technologies.[1]

6.73 In summary on GHG:

· the decarbonisation benefits of unconventional hydrocarbons from Scotland are not clear or guaranteed;

· Scottish emissions during appraisal and production of unconventional gas may increase;

6.100

· The impact on the Scottish Government policy for reducing GHG emissions needs strategic consideration as unconventional hydrocarbon extraction will maintain and continue Scottish fossil fuel-derived GHG emissions above an alternative scenario of reliance on renewable energy (noting our remit here is not to consider the feasibility of renewable sources in meeting complex energy demands).[2]

1.2 JOAN MACNAUGHTON ON EMISSIONS TO 2035

Joan MacNaughton, Chair of World Energy Trilemma, World Energy Council, comments on UOCG:

A European strategy for gas would lead to an increase in GG emissions by 2035.(4)

“availability of cheap shale gas is also likely to depress investment in low-carbon technologies such as nuclear and renewables.”[3]

“in light of these predictions, the ‘transitions’ argument seems to us a dubious and unwise strategy for meeting Scotland's strict greenhouse gas emissions targets.”[4]

Since the writing of this section, the UK Government’s CCC report (July 2016) has added extra material for consideration – see section 3.4 below on the ‘bridging/transition’ argument.

2. TECHNICAL ISSUES

In the Broad Alliance’s view, meeting emissions targets, via reduced fugitive emissions and a necessary 95% carbon capture target, would be an unlikely scenario, both on economic and technical grounds.

2.1 JOAN MACNAUGHTON ON METHANE AND CARBON CAPTURE ISSUES

MacNaughton’s view is that

“Methane leaks have been a significant issue in the USA (but “they’ve sorted that now”)

Carbon capture in gas powered power stations would need to be 95%, but even then would not be ideal.”[5]

2.2 ECONOMICS OF CARBON CAPTURE & STORAGE

Although Scotland has world-leading CCS R&D projects, the need to develop cost-effective CCS technology for continued reliance on natural gas is necessary now for UGE to be viable industry. It cannot wait for future improvements if the UGE strategy is to be implemented now as a transition fuel. The economics and technical specifications for MacNaughton’s 95% target seem unlikely to be met.

Boot-Hanford (2014) predict that plans for CCS, in the immediate term, are “both internationally and in the UK, are unlikely to deliver the level of CCS deployment that many suggest will be required.543 [6](see appendix 2)

2.3 HOWARTH ET AL. (2011)

Howarth et al. (2011) argue for a projected outcome where UGE greenhouse gas emissions do not happen at sufficient levels in practice to mitigate Climate Change impact. Their high estimate figure for methane emissions through ‘fugitive emissions’ has been disregarded by Azapagic et al. [7] as a statistical outlier compared to more favourable estimates. However this must be viewed in the context of Howarth’s report’s independence from industry bias, in favour of a more committed concern to focus on the risk of climate change impacts. Its significance should be noted as a counter-balance in evaluation of the array of research sources. The rigour of its scientific integrity can be demonstrated by its use of primary sources (see appendix 1). We do not feel it should be disregarded.

The report includes the following points:

“Methane is a powerful greenhouse gas, with a global warming potential that is far greater than that of carbon dioxide, particularly over the time horizon of the first few decades following emission.

These methane emissions are at least 30% more than and perhaps more than twice as great as those from conventional gas.

Compared to coal, the footprint of shale gas is at least 20% greater and perhaps more than twice as great on the 20-year horizon and is comparable when compared over 100 years.”

3.6% to 7.9% of the methane from shale-gas production escapes to the atmosphere in venting and leaks over the life-time of a well.”[8]

3. Committee ON CLIMATE CHANGE (CCC) REPORT, JULY 2

3.1 CCC REPORT – EXECUTIVE SUMMARY

The recent (July 2016) release of the Committee on Climate Change report to the Westminster Government[9] not only confirms, but validates Broad Alliance concerns regarding climate change emissions as we have argued above. Our response, given the short notice, is highlighted as follows, with key concerns in bold type.

In the Executive summary it states:

“The implications for greenhouse gas emissions of shale gas exploitation are subject to considerable uncertainties, both regarding the size of any future industry and the emissions footprint of production.”

“Our assessment is that exploiting shale gas by fracking on a significant scale is not compatible with UK climate targets unless three test are met,” one of which is,

“Production should not be allowed in areas where it would entail significant CO2 emissions resulting from the change in land use”.

The Broad Alliance submits that current live PEDL license areas in Scotland being predominantly agricultural land with relatively lower CO2 emissions would, using the criteria stated, preclude them being used for any form of Unconventional Gas Extraction.

A far as Global Emissions are concerned the summary states

“Increased UK production of fossil fuels could affect global emissions”.

Given that Scotland has, at this moment, minimal onshore fossil fuel extraction, the Broad Alliance is of the opinion that any further onshore fossil fuel extraction WOULD affect global emissions. As we have argued above, we have little confidence that the ‘transition’ would in fact lead to an overall lower carbon footprint.

In fact the summary continues, “Domestic production of shale gas will lead to some additional UK emissions… The size of these extra emissions depends on the size of the future industry, about which there is considerable uncertainty”. Also, “Accommodating additional emissions from shale gas production of 11MT/year may be possible, although it would require significant and potentially difficult offsetting effort elsewhere”.

The Broad Alliance would like to put this in a Scottish context; given the much stricter emission targets set by the Scottish Government, ‘accommodating’ additional emissions a fraction of the amount quoted is virtually impossible.

3.2 CCC REPORT CH.2 – CARBON FOOTPRINT OF RESULTING INDUSTRIAL USE

In chapter 2 the report states

“Our assessment is therefore that UK shale gas production will do little to reduce energy bills, with prices set by international markets. This finding is consistent with those of other studies. Production that bypasses wholesale markets could, however, reduce costs for some industrial users.”

The Broad Alliance is of the opinion that the use of shale gas by industrial users could lead to further emission increases due to industrial processes. This would obviously have to be taken in to account in any calculations regarding Scotland's strict emission targets.

3.3 CCC REPORT CH.3 ON ‘BRIDGING FUEL’

In chapter 3 the report states, “Carbon budget scenarios do not imply a role for UK shale gas as a bridging fuel, given the relative timing of coal closures and potential UK shale gas production”.

This categorial statement confirms our argument in section 1 that the Transition Fuel argument is false. The Broad Alliance recognise that the renewables sector is stepping up to fill the void left by the demise of Scottish coal production, as technological advances in renewables continue apace. In our opinion this negates the need for shale gas extraction in Scotland, either as a bridging fuel or indeed as a fuel “of the future”.

3.4 CCC REPORT CH.3 ON CCS

Regarding CCS, the report states,

“shale gas is one source of fossil natural gas. Although natural gas has a lower carbon content than other fossil fuels, it is not low carbon unless used with CCS. UK unabated consumption of oil and gas, (i.e. without CCS), will need to fall over the coming decades in order to meet the carbon budgets and the 2050 target”.

“The recent cancellation of the UK CCS Commercialisation Programme does not mean that CCS cannot play a role to 2050, but this cancellation has raised doubts about that role and may imply a substantial delay in its deployment at scale”.

The Broad Alliance concur with the findings of this part of the report; CCS is not an option at the moment, therefore there is no chance of planned shale gas extraction meeting the strict Scottish Government carbon reduction targets.

3.5 CCC REPORT C.3 ON ENVIRONMENTAL ASSESSMENT (EA) AND LAND USE

Regarding emissions of shale gas extraction during production, the report states, “However, in England the EA only regulates to the boundary of the shale well site. It is essential that the requirement for methane mitigation extends beyond the well pad to all associated infrastructure prior to the gas being injected into the grid or put to use”.

In a Scottish context, the Broad Alliance are of the opinion that the monitoring area for any fugitive methane would have to be in an area surrounding the well site, pre-determined in conjunction with the appropriate regulatory body, and include all associated infrastructure up to and including the end user. The costs of this extra duty of care would have a considerable impact on commercial viability, but its omission in a business model would have serious emissions implications.

Regarding land use change emissions, the report states, “The results presented here include estimates of land-use change emissions that result from development of wells on grassland. Were the development of wells instead to occur in areas that have much greater potential for carbon release (e.g. areas of deep peat soils), then land-use change emissions would be much greater and could dominate the results. Given the scale of such potential emissions, production on such land should not be allowed”.

3.6 SCOTLAND’S THIRD NATIONAL PLANNING FRAMEWORK ON LAND USE (NPF)

The Broad Alliance would draw attention to these excerpts from Scotland's Third National Planning Framework on Land Use:[10]

Our principal physical asset is our land. Our most productive soils extend along the east coast and across the Central Belt into Ayrshire. Peatlands are an important habitat for wildlife and a very significant carbon store, containing 1,600 million tonnes of the 3,000 million tonnes in all Scottish soils.[11]

The report continues:

“We have long sought to protect Scotland’s environment, recognising that it is a dynamic resource rather than a fixed asset. To better reflect this, more proactive and innovative environmental stewardship is required. The pressing challenge of climate change means that our action on the environment must continue to evolve, strengthening our longer-term resilience. A planned approach to development helps to strike the right balance between safeguarding assets which are irreplaceable, and facilitating change in a sustainable way. We must work with, not against, our environment to maintain and further strengthen its contribution to society.[12]

The Scottish Government’s Land Use Strategy sets out key principles for the use and management of Scotland’s land. It emphasises that land use should deliver multiple benefits, and encourages us to make best use of assets to support primary activities including food production, flood management and carbon storage. To achieve this, we must recognise that the environment is a functioning ecosystem and take into account the opportunity costs arising from poor decisions on land use.[13]

In passing, it is noted that additional impacts on ecosystems, agriculture and flood risk are also significant. However, for the purposes of this report, the NPF makes clear that the issue of carbon storage through disruption and change of land use is a significant issue.

These statements, in our opinion, vindicate our stance opposing all forms of Unconventional Oil and Gas Extraction. It is inconceivable that it would be allowed under any circumstances given the tone of these statements.

3.7 CCC REPORT ON CARBON BUDGETS

Regarding the impact on Carbon budgets, the Committee on Climate Change Report continues:

Even tightly regulated oil and gas production leads to some emissions. Domestic onshore production in place of imports would mean that production emissions occur in the UK rather than overseas. This would therefore increase UK greenhouse gas emissions, even if it leads to no greater consumption of oil and gas in the UK and even if the overall greenhouse gas footprint of UK production is lower than that of imported gas. Onshoring of production means onshoring of emissions relating to production.

The implications for greenhouse gas emissions of shale gas exploitation are subject to considerable uncertainties, both regarding the size of any future industry and the emissions footprint of production.

The Broad Alliance note that the report states that there are ‘considerable uncertainties;’ that being the case, shale gas exploitation should not be permitted by the Scottish Government.

The report continues;

Meeting the 2050 target

The Climate Change Act specifies a target to reduce emissions in 2050 by at least 80% on 1990 levels. It is not clear that there will be much scope for international trading to meet this target, so it is sensible to plan to reduce emissions by 80% across all domestic sectors, plus a UK share of international aviation and international shipping (Box 5.3).

It is too early to estimate possible ranges for emissions that might be associated with onshore petroleum extraction in 2050. The Committee would make such estimates if the evidence base improves sufficiently.

It is also premature to attempt to identify with any confidence specific areas in which effort could be increased to offset new sources of emissions on that timetable. The 2050 target is very challenging to meet and requires major effort to reduce and limit emissions, so flexibility should not be taken as a given.

Should emissions in sectors excluding shale gas exploitation be allowed to go well beyond our Central scenario in one or more areas (e.g. uncontrolled expansion of aviation, little or no CCS, failure to decarbonise heat), then the 2050 target would be at risk and it is very unlikely that there would be scope for additional emissions from shale gas exploitation consistent with meeting carbon budgets or the 2050 target.

Should the emissions impact in 2050 be similar to that in 2030 it is likely to be considerably more difficult and expensive to find ways to offset this, due to the stretching nature of the 2050 target.

In a case in which CCS is not deployed at all by 2050, this challenge would be much greater. Even without additional emissions from onshore petroleum extraction, our analysis shows that the absence of CCS is likely to require near-full decarbonisation of surface transport and heat in buildings by 2050. It is difficult to see how significant further emissions reductions could be found to offset the impact of additional fossil fuel production.

The Broad Alliance concur with the Committee’s statement and would re-emphasise that as the report states, ‘it is difficult to see how significant further emissions reductions could be found to offset the impact of additional fossil fuel production.’

Again, we remain unconvinced that once a UOGE industry is established there would be a likely scenario of genuine transition away from investment in it into sufficient renewables investment. ‘Additional fossil fuel production’ therefore seems the most likely outcome with offsetting alternative reductions equally unlikely.

In conclusion the CCC report states:

3. Conclusions and recommendations

The prospects for a domestic onshore petroleum industry are currently highly uncertain. It depends on the underlying economics of production, which in turn depend on the productivity of UK geology. This can only be resolved via exploratory drilling. But even if such exploration produces favourable results, other uncertainties remain, including whether public acceptability challenges can be overcome and the viability of UK onshore production in the context of developments in international fossil fuel markets.

Should an onshore petroleum industry be established in the UK and grow quickly, this would have the potential for significant impact on UK emissions. In order to ensure that these are manageable within carbon budgets, it is necessary that increased UK production does not feed through into increased unabated consumption of fossil energy; that emissions associated with production are strictly limited; and that the production emissions that do occur are offset by actions to reduce emissions elsewhere in the economy in order to stay within overall carbon budgets.

Our assessment is therefore that onshore petroleum extraction on a significant scale is not compatible with UK climate targets unless three tests are met:

• Test 1: Well development, production and decommissioning emissions must be strictly limited. Emissions must be tightly regulated and closely monitored in order to ensure rapid action to address leaks.

- A range of technologies and techniques to limit methane emissions should be required, including ‘reduced emissions completions’ (also known as ‘green completions’) and liquid unloading mitigation technologies (e.g. plunger lift systems) should these be needed;

- A monitoring regime that catches potentially significant methane leaks is essential in order to limit the impact of ‘super-emitters’;

- Production should not be allowed in areas where it would entail significant CO2 emissions resulting from the change in land use (e.g. areas with deep peat soils);

- The regulatory regime must require proper decommissioning of wells at the end of their lives. It must also ensure that the liability for emissions at this stage rests with the producer.

• Test 2: Consumption – gas consumption must remain in line with carbon budgets requirements. UK unabated fossil energy consumption must be reduced over time within levels we have previously advised to be consistent with the carbon budgets. This means that UK shale gas production must displace imported gas rather than increasing domestic consumption.

• Test 3: Accommodating shale gas production emissions within carbon budgets. Additional production emissions from shale gas wells will need to be offset through reductions elsewhere in the UK economy, such that overall effort to reduce emissions is sufficient to meet carbon budgets.

There also remains a question over whether increased fossil fuel production in the UK would lead to higher overall emissions globally (Box 5.4). This is something that we have not been able to explore in this report, but are planning to look at later this year.

There are other issues linked to ongoing gas consumption and carbon budgets, but not specific to shale gas production. These include methane emissions from the storage and transportation of gas and the future use of the gas grid. We will consider these issues separately in future reports, including our annual Progress Reports to Parliament.

This report provides our first advice under the Infrastructure Act. We are required to provide further advice at five-yearly intervals. However, given the pace at which things could develop, we will monitor this area and, if necessary, provide further advice outside this predetermined cycle.

The Broad Alliance note the use of the phrases; “currently highly uncertain” and “other uncertainties remain”. It is ever clearer that Climate Change is the greatest challenge to be faced on a global scale, and our hope is that Scotland, even as a small nation, could continue with its ambitious targets. We could truly be a flagship nation on the world stage, using our abundant natural resources for renewables, showing that it can be possible. We believe that as long as even the tiniest “uncertainty” remains, then Unconventional Gas and Oil Extraction have no place in Scotland.

The attached report is the response to your request for an assessment of Scotland’s progress towards meeting emission reduction targets.

It is our third report on Scotland’s progress towards meeting emission reduction targets, and reports on progress towards achieving the second annual target. We provide our assessment of progress against the target for 2011, the latest year for which official data is available. We also consider traded sector data for 2012, as well as macroeconomic and temperature data, to give an indication of what is likely to have happened to emissions in Scotland in 2012 (the 2012 inventory for Scotland will be available later this year).

We then discuss underlying progress towards reducing emissions through the development and implementation of policies and measures.

Scottish emissions were slightly higher than the legislated target in 2011, by around 0.8 MtCO2e. This can be attributed to the recent revision of the Scottish greenhouse gas inventory, which added 1.2 MtCO2e to estimated emissions in 2011. However, it should not distract from the assessment of underlying progress reducing emissions.

While the inventory revision represents an improvement in the methodology for estimating emissions, it will continue to make achievement of currently legislated targets more difficult. There are two basic options for addressing this. The first is to adjust targets, for example by recasting these in terms of year-on-year emissions reductions or by revising the targets to allow for the inventory revision. The second would be to adapt to the inventory change by finding additional opportunities to reduce emissions that go beyond current and proposed policies.

Scotland has made good progress in a number of key emitting sectors, namely renewable electricity, energy efficiency and fuel efficiency of new vehicles, despite the first two legislated targets being missed. However, challenges remain to achieve the stretching annual emissions targets and sectoral targets set out by the Scottish Government and further action is required in terms of policy development and implementation.

The Broad Alliance would respectfully suggest that the Scottish Government should develop a policy to stop all planned Unconventional Gas and Oil Extraction. Implementation of such a policy would undoubtedly help to meet the challenges of the ‘stretching targets’.

4. CONCLUSION

The Broad Alliance of Scottish community groups opposed to UOGE believes that Climate Change Impacts of the industry are totally unacceptable. Given the evidence we have highlighted above, including that of Government advisors, we are confident that the Scottish Government will, under no circumstances, permit the development of this industry.

The Broad Alliance reserves the right to submit further evidence as and when it becomes available.

ADDENDUM

Our submission was made before this urgent report from the European Union.

The Broad Alliance would draw attention to the conclusions of this communication, especially this statement:

Europe's transition to the low-carbon economy needs to accelerate.

Current plans for Unconventional Oil and Gas Extraction in Scotland are at odds with the EU recommendations, given the tone of this communication, the Broad Alliance further restate their case that UOGE is incompatible with the Scottish Governments strict Climate Change reduction measures, the sense of urgency relayed by this communication further strengthens our opposition to all forms of UOGE.

APPENDICES

APPENDIX 1 REFERENCES CITED BY HOWARTH ET AL. (2011)

1. Armendariz A (2009) Emissions from natural gas production in the Barnett shale area and opportunities for cost-effective improvements. Report prepared for Environmental Defense Fund, Austin TX

5. Council of Scientific Society Presidents (2010) Letter from the council to President Obama and senior administration officials, dated May 4, 2010. Council of Scientific Society Presidents, 1155 16th Avenue NW, Washington, DC 20036. Available athttp://www.eeb.cornell.edu/howarth/CCSP%20letter%20on%20energy%20&%20environment.pdf

APPENDIX 2 CARBON CAPTURE & STORAGE UPDATE (2014)

“In the relatively small literature on CCS as an investment proposition, there appears to be something of a consensus emerging that the policy support mechanisms under consideration, both internationally and in the UK, are unlikely to deliver the level of CCS deployment that many suggest will be required.(543)

Hamilton and colleagues (546) suggest that given ‘nth of a kind’ cost estimates available and the projected value of avoided carbon emissions under the then proposed US carbon cap and trade bills, Super Critical Pulverised Coal (SCPC) plant with CCS would not present a breakeven proposition until after 2030.

Osmundsen and Emhjellen (547) argue in their 2010 paper that CCS does not offer a profitable proposition and delivers CO2 abatement at ‘very high cost’. Others contend that the EU ETS on its own won't lead to large scale CCS deployment (548) a view that has some support from within the industry. (549) Flannery (550) contends that ‘CCS today lacks both an economically viable policy framework and a business model’.”

[5] Joan MacNaughton, CB, HonFEI, Chair, Energy World Trilemma, World Energy Council, former Director General of Energy for the UK, Keynote speech, Glasgow University ‘Festival of Sustainability’ seminar, 13 June 2016

The Transport Impacts of Unconventional Gas Extraction in Scotland

“The Community Empowerment (2015) Act, which promotes public service reform, provides a legal basis for participation, and establishes new rights and responsibilities for community bodies and public authorities. Local communities can now identify local outcomes (including transport initiatives) related to economic development, enhancing accessibility and sustaining remote communities, which are then delivered in partnership.” National Transport Strategy 2016, The Scottish Government (1)

1. Introduction

This paper sets out the Broad Alliance’s observations concerning the negative and often disastrous transport impacts that are the outcome of the Unconventional Oil & Gas Extraction (UOGE) industry, and our view is based on evidence from countries where the unconventional gas agenda has been sanctioned and welcomed by the authorities.

Having the opportunity to submit this paper is an affirming process, because it gives weight to the position statement of the Scottish Government that it will pursue a “considered and robust approach” before reaching its decision on permitting UOGE. It is also an opportunity for the Scottish government to show that its commitment to involving communities in transport planning (see our introductory quote) is genuine.

It is our hope that the Scottish government is going to take into account actual evidence, from actual places where UOGE is happening.

What they must not do is rely solely on the speculative assessments we have seen on transport and transport movements from the industry itself. We are sharply aware that “research to fail” and “fail to research” are two available approaches, and we hope this will also be clear to the consultants carrying out this impact study.

A fit for purpose transport network spanning the whole of Scotland, and providing for all needs, including the needs of our future sustainable economy, is of vital importance. This must be a network of many component parts making a collective infrastructure that enables, allows and provides for our citizens, our public duties, our businesses and our visitors to conduct and go about their daily activities easily, quickly and sustainably.

We have a range of local and national plans aimed at supporting a modern sustainable economy. Nowhere in them is the provision of transport infrastructure to enable a new dirty fossil fuel industry. It is an unwelcome add on; if the government is going to permit it, then it must first show how these transport needs can be met without negative impacts on other parts of the economy and community.

The Scottish government has stressed the importance of reducing the potential health impacts of transport (2), and in particular the amount of airborne particulates. It is also keen to encourage “active” transport, where people walk, cycle, and travel to the countryside in order to do more walking, thereby improving health. Indeed, these objectives have been a core element of the Scottish Executive’s transport strategy since 2006 (3). It is hard to see how UOGE fits with these aspirations.

Identifying and analysing the varied and interconnected impacts which might result from UOGE in Scotland is a task that requires major investment in modelling at a scale community spokespersons such as the Broad Alliance could never achieve.

In our view it is for the government and officials to do such modelling and to do it looking at worst-case scenarios, rather than the very modest under-estimates the industry will give for traffic movements.

Without doubt, the points raised in this paper won’t be the only transport considerations taken into account by our ultimate decision makers in the Scottish Government. We will expect to see some very sophisticated risk assessment and impact modelling. What we will not find acceptable is research based only on estimates provided by the industry itself.

2. What to measure and how to measure it

2.1 Using the precautionary principle

The Broad Alliance is pleased to see that the Scottish Government is committed to an evidence-based approach to reaching a decision on UOGE. We are not opposed to the idea of establishing baselines that would enable any change to be accurately measured and cause attributed.

However, we are not happy with the idea of Baseline Indicators that are only used to provide a measurement of change once the industry gets underway. In our view this industry should not be going ahead under any and all circumstances.

However, Baseline Indicators could be used to model and measure variations BEFORE any decision to permit UOGE is taken. In other words, if Baseline Indicators only have value for saying “we told you so” – then they have no value at all to affected communities.

It is worth noting that Scotland already has a framework of established indicators, which are used to evaluate and monitor a range of public policy decisions - the Scottish National Indicators. (4) Individually, and collectively these could be a starting point for measuring all potential UOGE impacts.

Some of those most relevant to transport are:

Reduce traffic congestion

Improve Scotland's reputation

Improve people's perceptions about the crime rate in their area

Reduce deaths on Scotland's roads

Improve people's perceptions of the quality of public services

Increase the proportion of babies with a healthy birth weight

Increase physical activity

Improve self-assessed general health

Improve mental wellbeing

Reduce premature mortality

Improve people's perceptions of their neighbourhood

Improve the state of Scotland's historic sites

Improve access to local greenspace

Increase people's use of Scotland's outdoors

Improve the condition of protected nature sites

Improve the state of Scotland's marine environment

Reduce Scotland's carbon footprint

Increase the proportion of journeys to work made by public or active transport

Reduce waste generated

Increase renewable electricity production

Some of these have an obvious correlation to specific transport impacts arising from UOGE. UOGE could easily be evidenced as a cause of, for example, a failure to “reduce traffic congestion”, “reduce deaths on Scotland’s roads”, “reduce Scotland’s carbon footprint”.

It would be relatively easy to use as a Baseline the injury/accident/incident records on highways that will be affected by UOGE, relative to current traffic flows. By adding in the additional traffic, and in particular HGV journeys, it should be possible to extrapolate the extent to which the additional traffic will bring about a negative impact.

Other National Indicators may appear to have a less obvious relationship with UOGE transport impacts, but a pathway can be established for a number of them. For example, busier, more polluted and damaged roads would have a negative impact on “active transport”, or “physical activity”, or “perceptions of a neighbourhood” or “people’s mental health” to name but a few.

The Broad Alliance therefore suggests that the Scottish Government measures the impacts of UOGE against its own National Indicators. Will it help us to achieve them, or not?

Furthermore, as well as doing this at a national level, it should also be done at a local level where the impacts would be more concentrated and experienced by local communities and people living in them.

The Broad Alliance would also expect the following information to be gathered:

Historic traffic counts on all proposed routes.

Air Quality baseline values on all proposed routes.

Historic accident rates on proposed routes.

Properties on proposed routes are offered the right to have a structural survey paid for prior to commencement of operations.

Usage of any nearby public rights of way and assurances that these will be guaranteed through all phases of operation from exploration through production to decommissioning.

Assessment of infrastructure, i.e. bridges, drainage, water supply, electricity supply on proposed routes to confirm if they are capable of withstanding the additional stresses of much increased HGV traffic.

If the Scottish Government and their consultants believe that this level of information is not available and cannot be made available in order to model the changes that UOGE will bring, then we would suggest that, using the precautionary principle, the development of UOGE should be rejected on transport grounds.

2.2 Scoping, defining and modelling transport impacts

Given the time and resources available to the Broad Alliance, we do not offer this as a comprehensive study but just a slender reflection of the large number of concerns which have been raised within the communities we represent.

The potential scale of UOGE in Scotland is enormous. If once permitted in the existing licensed areas then there will be pressure for further areas to be licensed, as envisaged by the UK government DECC in the 14th Onshore Licensing Round, that is to say the whole Central Belt of Scotland.

In considering transport impacts, therefore, it will be essential to model exponential growth and not only current licenses. A multi-layered approach will be needed and some complex transport models.

The Broad Alliance asserts that major problems will arise as a result of UOGE and that transport issues and impacts will be experienced over Scotland’s most densely populated area, varying depending on location, e.g. proximity to well-sites, sources of water, location on transfer routes. We anticipate that the major issue will be the impact on rural and trunk roads ill-designed to cope with significant additional heavy traffic.

Our focus in this submission is on road transport, though there are other areas that could be considered. We do not feel able to comment on Air Travel and the Maritime Impacts of UOGE except to state that we do not approve of the importation by sea of gas which has been extracted through unconventional means causing damage in other countries.

In this submission we define Unconventional Oil & Gas as the collective term for different types of oil and natural gas held in reservoirs and being exploited in non-traditional ways (irrespective of depth). Unconventional Oil & Gas Extraction (UOGE) techniques include, Coalbed methane, Shale Gas (fracking) and Coal Seam Gasification. Scotland is threatened with all three of these.

With the exception of coal seam gasification, extraction is most likely to take place from a series of onshore well pads and transport impacts will arise from their preparation, construction and operation.

Three licences for coal seam gasifaction have been awarded in Scotland relating to both onshore and close-to-shore areas. These would operate from on-shore footprints and it is here that any transport impacts should be measured.

However, it has also been suggested that close-to-shore drilling could be used if certain conditions prevailed and this would not provide a different set of regulatory and legislative challenges and different transport impacts. However we have not explored these in detail, only note that they may need to be considered.

3. What will actually happen?

3.1 UOGE processes that will have transport impacts

Shale gas development typically takes place through the following stages:

Stage 1 - Well-pad site identification and preparation

Stage 2- Well drilling, casing and cementing

Stage 3- Technical hydraulic fracturing

Stage 4- Well completion

Stage 5- Well production

Stage 6- Well/ site abandonment

The infrastructure likely to be associated with development of shale gas resources includesthe following:

 Gathering and laying mains pipelines

Constructing Compressor stations

Gas processing and cryogenic plant for production of LNG

Creating and utilising a water treatment infrastructure

Building or extending road connections to gas well pads and other facilities.

Transport impacts would take place consecutively through gas well development stages 1-6. However, if permission were to be extended to licence areas beyond the current ones, then many of these stages would be taking place simultaneously in different areas, leading to a cumulative negative effect on the transport infrastructure of the Central Belt, already under considerable pressure.

This point is worth underlining. The industry will stress consecutive processes – one stage to the next in a single location – but the reality will be that if the moratorium is lifted, that would imply a commitment by the Scottish government to the development of this industry and therefore potential further licensing rounds. It will be difficult for local authorities to disallow new development on planning grounds, because they have been told that they cannot go beyond the very limited safeguards set out in the National Planning Framework.

We would therefore be experiencing the traffic impacts of all the different development and production stages happening in different locations across the Central Belt, at the same time.

3.2 The level of additional road journeys

As there is no UOGE industry yet in the UK, we need to take figures from the United States to inform the discussion:

The total number of truck movements in the US during the fracking phase alone can be anywhere from 600 to 1,000 one-way trips per well. (5) This suggests upwards of 6,000 truck movements during this phase for a ten well pad. During the heaviest period the total number of trips could be as high as 250 per day.

New York State Department of Environmental Conservation also estimated that 100 truck movements per well are estimated to be needed for waste water disposal, that would be a total of 1,000 movements for a ten well pad. This figure would be less if pipelines were available for the delivery and disposal of water.

However, Broderick et al suggest that the data for New York combined with data in relation to exploratory drilling in the UK “...suggests a total number of truck visits of 7,000-11,000 for the construction of a single 10 well pad in the UK."(6) These movements are made up as follows:

 Drill pad and road construction equipment 0.7%

 Drilling rig 0.5%

 Drilling fluid and materials 4.6%

 Drilling equipment (casing, drill pipe, etc.) 4.6%

 Completion rig 0.2%

 Completion fluid and materials 1.8%

 Completion equipment (pipe, wellhead) 0.5%

 Hydraulic fracture equipment (pump trucks, tanks) 3.0%

 Hydraulic fracture water 54.6%

 Hydraulic fracture sand 2.3%

 Flow back water removal 27.3%

These estimates are consistent with the Institute of Directors’ estimate of 870 truck movements per well, assuming that water is transported by truck rather than obtained from a mains supply.

In relation to Coal Bed Methane extraction HGV movements would be similar during well pad and access road/utility corridor construction, and drilling as the site and infrastructure development requirements are broadly the same, though well pads for CBM may be smaller and more numerous. But truck traffic would be lower overall during the final stages of drilling and completion, unless a decision is taken to frack the well, which would increase the trips to the same level as shale wells.

If produced water is stored and transported off site by truck the number of HGV trips will increase dramatically. For example, one prospective UK operator suggests water will be stored onsite and transported by tractor to a nearby treatment facility. Truck movements for the development of that facility (based on 14 drill sites) are estimated at around 3000 during construction, drilling and site reduction - but this does not include movement of produced water by tractor. There is no reason to suppose that there will always be a “nearby waste water treatment facility” available and so we would need to assume that much of the toxic water would need to be transported to treatment plants by tanker.

4. The impacts

4.1 Road infrastructure

A 2014 study published in Journal of Infrastructure Systems, “Estimating the Consumptive Use Costs of Shale Natural Gas Extraction on Pennsylvania Roadways,” noted that local roads are generally designed to support passenger vehicles, not heavy trucks. (7) This is would also be the case in Scotland.

This same study looked at the design life and reconstruction costs of roadways in the Marcellus shale formation in Pennsylvania and reviews the impact of heavy vehicles on roads.

“The useful life of a roadway is directly related to the frequency and weight of truck traffic using the roadway,”(8) the review says, then goes on to describe how heavier vehicles cause exponentially greater damage. Leighton et al summarise the effects cited in the review, thus:

“Where a single axle with a 3,000-pounds load has a load equivalency factor (LEF) of 0.0011; for an 18,000-pound load, the LEF is 1.0; and for 30,000 pounds, it’s 8.28. This means that 18,000-pound and 30,000-pound single-axle … do about 900 times and 7,500 times more damage than a 3,000-pound single axle pass, respectively.” (9)

Here in Scotland a significant part of the road network that would be used for UOGE is a network of rural and smaller roads, and the Broad Alliance would expect these roads to be subjected to a sustained period of heavy use requiring substantial repair and maintenance.

However, it is not only the rural and smaller roads that will suffer but also main arterial motorways and ‘A’ roads, which are already under considerable stress in terms of volume of traffic.

When it comes to paying for repairs, authorities can try to gain recompense from the industry, by imposing additional fees or taxes.

But the US study describes how costs were generally borne not by the industry, but by state transportation authorities, and thus taxpayers and this would also be the case in Scotland. We have seen no indication that the industry intends to contribute to funding repair and maintenance of roads. Indeed when INEOS had a recent major infrastructure project at Grangemouth it turned to the public purse for support.

Road damage would have an impact on other road users and pedestrians: additional costs for motorists having to repair damaged vehicles; risk of injury to cyclists because of uneven road surfaces or pot holes and the risk of personal injury to pedestrians.

Scotland’s road layout is more modest than long straight roads in the wide open spaces of the US. Small roads would suffer a heavy toll where there are tighter corners, narrow bridges, fences, kerbs and culverts

It is our view that any money put into communities by the UOGE companies, if it materialises, will be more than swallowed up by the cost to local authorities of repairing roads and mitigating all the other damage to other parts of the economy that UOGE will cause.

The Broad Alliance view is that any increase in road traffic and other traffic impacts that negatively affect the health, welfare and lifestyle of people in communities affected by UOGE, are totally unacceptable.

4.2 Impact on road accidents and fatalities

It is inevitable that additional journeys, especially through small towns and villages, will lead to additional road traffic accidents and fatalities.

Pedestrians and cyclists have a higher rate of fatality per distance travelled than for any other mode of transport, with the exception of motorcycles, and more than one third of pedestrian fatalities are children under 16. Children in the UK are at twice the risk of injury from road traffic compared to their peers in France and Germany.

In terms of the cost to society of road transport fatalities:

“The cost per fatality in Scotland in 2007 was estimated to be in the region of £1.65 million. This valuation of costs is based on a ‘willingness to pay human cost’ approach. It is intended to encompass all aspects of the costs of casualties including both the human and direct economic costs. The human cost covers an amount to reflect the pain, grief and suffering to the casualty, relatives and friends and, for fatal casualties, the intrinsic loss of enjoyment of life. The economic cost covers loss of output due to injury and medical costs”. (10)

The World Health Organisation recommends that the dangers of roads would be reduced through an approach that prioritises vulnerable road users and limits the speed and volume of traffic through traffic calming measures. This is different from the previous approach, which sought to reduce casualties by limiting pedestrians and cyclists and facilitating traffic (eg by the use of guardrails and barriers etc). But sustaining this more progressive approach in rural towns and villages will be made more difficult by significant additional HGV journeys linked to UOGE.

The consequences of road traffic crashes are often more severe in rural areas than in urban areas.

In the UK, the number of fatalities on all urban roads in 2010 was 572, compared to 1,046 for all rural roads, and 113 for motorways. (11) The design of rural roads and higher speed limits mean that road traffic crashes are likely to occur at higher speeds, with a higher risk of injury.

Access to rural roads is also often poor, which means the distance the emergency services must travel to reach those involved in crashes, and the equivalent delay in reaching healthcare services, poses a greater risk. Almost two-thirds of all road deaths are on rural roads.

4.3 Impacts on Health

The negative health effects of UOGE transport will be more intense in Scotland than in the United States where there are lower population densities – and as documented by numerous research studies, these are already extremely serious. The Broad Alliance has submitted a number of health studies to the Impact Assessment being conducted by Public Health Scotland.

But relating to transport, Scotland has the highest level of premature deaths from cardiovascular disease, coronary heart disease and stroke in the UK. (12) Increasing the amount of air pollution from additional traffic journeys would increase the incidence of these diseases.

The areas with the highest proportion of total deaths associated with air pollution are, with the exception of Aberdeen City, areas that would be negatively affected by UOGE traffic:

1) Edinburgh (4.9%)

2) Glasgow City (4.7%)

3) Falkirk (4.3%)

4) North Lanarkshire (4.3%)

5) = Aberdeen City and West Lothian (both 4.2%) (13)

To try to improve air quality, the Scottish government has implemented a range of measures, including identifying Air Quality Management Areas where the local authority must implement special measures, including traffic reduction. The additional UOGE traffic will negatively impact on their ability to achieve such improvements.

A 2005 European study, estimated that 3,900 myocardial infarctions per year could be attributed to traffic noise in Germany. Road traffic noise exposure has also been linked to increased rates of hypertension and psychological problems, including anxiety symptoms. There is strong and consistent evidence that the most common effect of excessive noise on children is cognitive impairment.

Transport is the leading cause of noise pollution. In addition to annoyance and sleep disturbance, there is increasing evidence that transport noise adversely affects the cardiovascular system, mental health, and school performance in children.

“Noise, smells and intrusive lighting are well recognised as health hazards and potentially serious interferences to normal day-to-day living. The stress that will be imposed upon individuals and communities is hard to predict or generalise, and will critically depend on the proximity and size of surrounding populations. It constitutes a significant form of ill health in its own right, and is a co-factor in the genesis of a range of other diseases and illnesses” (14)

McCoy and Saunders, Health and Fracking: The Impact and Opportunity Costs, Medact, 2015.

Epidemiological studies show that socially disadvantaged people are more likely to live near busy roads, and are therefore at greater risk of the negative effects of noise pollution.

4.4 Impact on pedestrians and cyclists

Walking is universal and inclusive but in recent years has struggled as a means of transport against a backdrop of steadily increasing vehicle numbers and traffic volume. Actually, cars present the greatest danger to pedestrians, but people are more likely to avoid walking along roads where there are high volumes of HGV traffic.

The 2010 Marmot review, quoting National Travel Survey data, highlighted that fewer primary school children walk to school now (52%) than they did twenty years ago (62%). (15)

There are of course a range of reasons for this, but reversing the trend requires that local roads should have less, and not more, heavy goods traffic.

It is likely that because of the volume of new traffic generated close to fracking sites, it will be very difficult for local authorities to sustain their commitment to walking and cycling. They will be forced instead to facilitate UOGE traffic, at the expense of local communities, exacerbating issues such as community severance, discouragement of walking and cycling, and stress and anxiety.

Cycling levels in the UK are low, and the risk of injury, or perceived risk of injury, is a major factor. Freight vehicles are the major risk to cyclists: they are 20 times more likely to be involved in cyclist road traffic injuries than cars, per kilometre travelled. Research on cyclist fatality rates in London between 1992 and 2006 has shown that freight vehicles were involved in more than four out of ten incidents. (16)

Additional HGV traffic on Scotland’s roads will lead to greater danger and greater fear of danger, discouraging cycling.

4.5 Impact on rural transport

Rural communities face a complex, and distinct, series of transport issues. People are reliant on car use as train and bus services have reduced. In 2012 the British Medical Association reported that the average journey length for those in rural communities is 10.5 miles - two miles higher than that of the UK average. Rural residents travel over 2,000 more miles per annum, in comparison to the UK average of 6,800 miles. (17)

The centralisation of healthcare, jobs, shops, education, training and services has led to the closure of many facilities, which has resulted in rural communities becoming increasingly reliant on travelling further to access services.

Most rural roads in the Central Belt are already under pressure from all of these journeys, and the addition of more HGV traffic will make life more difficult and undermine all the efforts made to encourage, for example, walking or cycling to school.

4.6 Impact on air pollution

Road-traffic emissions come from a number of sources including exhaust pipe emissions and re-suspended road dust. The main pollutants from road traffic include:

• particulate matter less than 10 or 2.5 microns (PM10 and PM2.5 respectively)

• nitrogen dioxide (NO2)

• sulphur dioxide (SO2)

• benzene and other volatile organic compounds (VOCs)

• ground-level ozone (O3) formed by interaction of VOCs with NOX in the presence of sunlight and heat.

It is estimated that in the UK, air pollution is associated with 50,000 premature deaths per year.

Research from 2010 estimated that in the UK particulate matter from transport leads to an average loss of life expectancy of six months, with 18.2 to 32.4 million life years lost. Fine and ultra-fine particulate matter in air pollution increases deaths from cardiovascular disease and respiratory illness. (18)

There is a growing body of evidence, acknowledged by authorities such as the BMA (19) and London Government, (20) showing that prenatal exposure to air pollution is associated with a number of adverse outcomes in pregnancy. These include low birth weight, intrauterine growth retardation, and an increased risk of chronic diseases in later life. Emerging evidence also suggests that long-term exposure to particulate matter, at levels such as those seen in major cities, can alter emotional responses and impair cognition.

4.7 Impact on the wider economy

Given the emphasis in the National Transport Strategy, 2016, and Scottish National Indicators (both previously referred to in this paper), on supporting the economy and connectivity through building and upgrading roads, we would be interested in a detailed analysis which takes into account factors such as:

· the negative cost to local business due to traffic from the UOGE industry.

· costs to local service providers because of congestion by way of additional HGVs.

· potential reductions in visitors and tourists.

· damage to local roads and the natural environment etc.

· the costs of additional duties to local authorities.

Local authorities in the potential UOGE areas have adopted carefully constructed infrastructure plans to support the businesses they have identified as important to their local economies. These take no account whatsoever of the impact of providing new road infrastructure, or mitigating damage to existing roads, as a result of UOGE. There will inevitably be an impact on other economic and commercial interests from the diversion of funds to support the demands of UOGE.

As well as mapping the additional costs, it will be important to measure the losses. For example, the damage to “Scotland the brand” and visitor numbers. Most of the local authorities in areas potentially affected have development plans that include increasing tourism and visitor numbers to attractions. But the reality is that nobody will want to spend their holiday or day out in a gas field, whilst competing for road space with additional HGV traffic.

5. Regulation and monitoring

It is often claimed that the UK, including Scotland, has a far superior and “gold-standard” level of regulation than the US.

Higher standards of regulation than the USA may well exist. However, in the few Scottish examples of UOGE related matters shown through the Dart Energy Public Enquiry in Falkirk, (21) or in the catalogue of “what shouldn’t have happened” at Canonbie, (22) “gold standards” have not been demonstrated.

The current economic climate means we are seeing tighter budgets for local authorities. This is already leading to reduced services, and transport planning teams under enormous pressure. The Vehicle Operator and Services Agency is under similar pressure.

It is our view that there are insufficient on-going resources to identify risks from UOGE road use, or to enforce changes if risks are identified. The Broad Alliance will not be content with general commitments to regulation. In our view there should be specific estimates of the additional funds that will be required by local authorities and VOSA and a commitment from the government to making these funds available. If this commitment cannot be made, then it is clear that UOGE is more than the transport infrastructure can cope with and therefore this would be another transport related reason for not going ahead.

6. Conclusion

If the Scottish government has a genuine policy commitment to reducing traffic and encouraging a modal shift to more active and sustainable forms of transport in Scotland, then reduced road capacity will have to be achieved and fewer HGV journeys.

Given that transport decisions have the potential to last decades, the decision made now on UOGE will have a long-term impact on Scotland’s ability to have a transport system that supports health and wellbeing.

It is with this in mind that we echo and endorse the words from the National Transport Strategy 2016’s title in saying – we need to prepare for tomorrow and start delivering today!

Our transport priorities must not place a leading importance on fossil fuels and must place communities’ needs at the forefront of decisions if we are to arrive at a positive future!

References

(1) National Transport Strategy, January 2016, Scottish Government http://www.transport.gov.scot/strategy/national-transport-strategy

(2) ibid

(3) Scotland’s National Transport Strategy, December 2006, Scottish Government http://www.gov.scot/Resource/Doc/157751/0042649.pdf

(4) Scottish National Indicators, Scottish Government

http://www.gov.scot/About/Performance/scotPerforms/indicator

(5) Leighton, Walter Kille, 2014, The impact of natural gas extraction and fracking on state and local roadways. Harvard: Kennedy School http://journalistsresource.org/studies/government/infrastructure-government/costs-shale-natural- gas-extraction-local-roads

(9) Leighton, Walter Kille, 2014, The impact of natural gas extraction and fracking on state and local roadways. Harvard: Kennedy School http://journalistsresource.org/studies/government/infrastructure-government/costs-shale-natural- gas-extraction-local-roads

A community response to the question “what is the Broad Alliance’s view on unconventional oil and gas[1] in Scotland?”

“Economic problems have no sharp edges. They shade off imperceptibly into politics, sociology, and ethics. Indeed, it is hardly an exaggeration to say that the ultimate answer to every economic problem lies in some other field” (Kenneth E. Boulding, Nobel nominated economist, The Economics of Peace, 1945)

1. METHODOLOGY

1.1 Measuring the wrong things with the wrong tools

We are very concerned that a cost benefit analysis (CBA) is to form one of the criteria for this economic impact study, and would argue for more socially progressive, holistic and sustainable approaches.

The fact that CBA is widely used in corporations does not give us any comfort, given the current global economic and financial crisis, including in the oil and gas industry. All the economic and financial activities that crashed in 2008 will have been subject to CBA.

We challenge the assumption that corporations provide the ideal for governance and decision-making for governments to follow.

CBA requires the monetisation of the components and results of a process, allowing a rationalistic weighing of pros and cons, and therefore transforms the perspective of government into the mindset of shareholders looking at an annual balance sheet[2] that values short-term gain over long-term costs and outcomes.

Factors like economic growth, new jobs, effects on health, lives saved or lost, endangered species and degradation in landscapes are made into numerical amounts and an overall cost-benefit ratio is made the basis of decision making. There are a number of major problems with this approach.

1.2 Getting the weighting wrong

Decisions about what is given greater weight, or monetary value, are not transparent or open to challenge and some things simply cannot be monetised. And these are precisely the things a government must consider, but that a corporation would view as externalities.

Businesses have a sole criteria – shareholder value - but governments have multiple requirements to consider social justice, global outcomes, environmental issues and to think and plan in an integrated way, and looking to the future.

1.3 Indifference to who pays the cost and who benefits

By transforming costs and benefits into monetary values, CBA is largely indifferent to who pays the costs and who receives the benefits. For example if a study shows that children with their developing neurological systems may pay a relatively small to medium health cost, but this is outweighed by costed benefits that are enjoyed by say, shareholders or landowners, then the CBA will, on balance, support the process.

Governments have a duty to think about the needs of the many and to prioritise the welfare of the most vulnerable individuals, so even when a positive ratio or calculation has been generated by a Cost-Benefit Analysis, huge issues over equity remain.

Usually communities that have to live with environmental or social hazards associated with an industry are more deprived, for instance soil pollution with heavy metals being associated with deprivation in post-industrial Glasgow.[3]

Some advocates of CBA would not necessarily be too troubled by this point, as the neoliberal mindset does allow for a winner-takes-all approach to economics, but this seems incompatible with the Scottish Government’s social democratic aspirations.

1.4 Disconnected approaches

CBA disconnects the part from the whole and the present from the future. It tends to consider processes in isolation whereas we would argue for an integrated approach to Scotland’s economic development that is based on the principles of husbandry and nurturing of healthy social and natural systems. This is a much wider conception of economics, but it is one which is likely to deliver greater equity, co-operation and solidarity for Scotland.

1.5 Discounting the future

Discounting (whereby the benefit of an investment is measured by looking at the interest that could have been earned if the funds invested were deposited in an interest-bearing account) is a fundamental of CBA. It is a perfectly respectable tool for a small company, but is deeply problematic when it comes to wider economic development and planning.

It suggests that money made now is more beneficial than the same amount of money at some point in the future. This tends to promote the economics of over-consumption and waste.[4]

It can distort the focus of governments, for example diverting public investment into infrastructure that promotes business activities or markets that will not make a long-term contribution to the economy (viewed in the widest sense of husbandry, nurturing social and natural systems and planning for the future).

CBA will give a fairly high value to deaths caused immediately by an industry or lack of regulation, but deaths occurring over a number of years because of exposure to a toxic or mutagenic chemical will be discounted, in a similar way to an economic benefit that is gained in some years’ time.[5]

In economic terms it will give a greater weight to benefits for the industry itself, but a lesser weight to the impact it will have on future economic or investment decisions.

The method of discounting the problems of the end game of an industry out of the present equation has been responsible for multiple problems in the UK. Examples are that the UK has significant nuclear waste for which there is no disposal or storage plan and that there are thousands of orphaned oil wells in the north sea. The current crisis over public infrastructure paid for through the PFI process are another example of this failure of future-proofing.

Discounting the future is especially important in the context of the long-term impact of climate change, in fact it could be said that this approach to economics has significantly contributed to climate change and the destruction of eco-systems.

1.6 There is a better way

CBA promotes a reckless ‘live fast die young’ philosophy that is ethically unacceptable, and surely good government means consideration far beyond the current generation of voters.

We would argue for a very different approach to assessing the economic impact of UOGE and not only because it is the wrong tool for assessing anything relating to the environment and public health, but also because it is one of the methodologies underpinning economic failure, growing inequality and social injustice.

We would stress that even if a CBA arising from this impact study suggests that UOGE is, on balance, “a good thing” this will not be a convincing argument for communities to grant any social licence to this process.

More holistic methodologies are available for assessing the potential of a new development or initiative, for example the Scottish government’s own National Performance Framework (NPF)[6] or Oxfam’s Humankind Index[7].

The question the Scottish government must answer is will this new industry contribute to achieving its own NPF goals. If it does not use the NPF for this assessment, what does that say about its actual commitment to those goals?

2. THE ECONOMIC PICTURE

2.1 A classic case of boom and bust

The United States, with its developed UOGE industry, must be the main source of evidence on costs and economic impacts. A short period of reasonable returns for early investors has been followed by a major collapse now underway where many investors will need to write off debts.

In an interview with the Financial Times as early as October 2013, Shell CEO Peter Voser explained this law of diminishing returns. Shell had just had to write down the value of its shale assets by $2.1bn dollars because: “[Shale well] decline rates are very high, so after 18 months your production drops very sharply, which means you have a business model of constant investment.”

Given that this is the case, and that returns against investment have never been spectacular and are now negligible, you have to ask how the industry was able to suck in such massive amounts of capital investment.

John Dizard writing in the Financial Times agrees: “What really surprised the industry was the continuing supply of new capital from lenders and return-short investors. This interrupted what would have been a typical oil and gas drilling cutback phase. In other words, yes, there is a big Marcellus effect, but it may turn out to have been superhyped by quantitative easing. We will see what happens if the oil price falls and interest rates ever rise.”[8]

This has been a kind of sub-prime scenario, fuelled with money created by governments through quantitative easing, and seeking a fast return. The result is investors encouraged to overlend to a fragile economic model.

As Andrew Critchlow[9] writing in the Telegraph, explained: “This rush to pump more oil in the US has created a dangerous debt bubble in a notoriously volatile segment of corporate credit markets, which could pose a wider systemic risk in the world’s biggest economy. By encouraging ever more drilling in pursuit of lower oil prices, the US Department of Energy has unleashed a potential economic monster and pitched these heavily debt-laden shale oil drilling companies into an impossible battle for market share against some of the world’s most powerful low-cost producers in the Organisation of Petroleum Exporting Countries (OPEC).”

The net debt of the leading 60 shale companies in January 2016 was $206bn compared to $100bn in 2006. Almost one third of the 155 oil and gas companies covered by ratings agency Standard & Poor are classified as B-minus or below, that is at risk of default. 50 companies have already filed bankruptcy and consultants De-Loitte suggest that more than one third of firms are likely to go bust.

The bankruptcies in the US have led to thousands of wells being abandoned, and these continue to leak methane. Between January 2015 and January 2016, 86,000 jobs were lost in the industry and that total continues to rise.

All of this suggests that in both economic and social terms, the overall impact of the shale industry in the United States has been

1. Greater economic instability, with the potential for a new debt crisis that could have global reverberations

2. Devastation for communities who have paid a huge cost in environmental destruction and industrialisation of rural areas in return for very short term minor benefits.

3. Devastation for families who have staked their future, including borrowing and mortgages, on this industry and now face unemployment.

We see no reason why the situation should be any different in the UK as a whole, and in Scotland. Therefore in answer to the question that KPMG have asked: How would the extraction of UOG affect Scottish communities and industries? we would say the effect would be entirely negative.

2.2 Who profits?

The estimated costs of constructing and running each individual well is subject to a number of factors offering a range of lifetime costs for each well of between $3.0 million and $8.0 million per well (excluding decomissioning and future monitoring costs).[10],[11]

Based on these estimates and using the Institute of Directors’ range of estimates for production volume[12] we can therefore attempt to estimate the floor or “break even” gas price required for economic extraction of shale gas in the UK.

The lowest bounds of each of these estimates implies a break even gas price of around $7.50 per thousand cubic feet of gas whilst the upper bound estimates imply a break even price of around $30 per thousand cubic feet of gas. Even the lowest bound lies significantly above the current (as of June 2016) price of $2.30 per thousand cubic feet and the upper bound lies at more than twice the record high gas price set in June 2008 of $13 per thousand cubic feet. (For comparison, the highest bound price for the gas price would be the rough equivalent of the price of oil reaching approximately $180 per barrel).

From this, it can be concluded that both shale oil and shale gas are unlikely to be economically viable in this current low hydrocarbon price environment and even if there is a return to recent higher prices, it is likely that the industry would still require significant subsidy or significant efficiency progression before it could be used at any kind of scale.

This appears to tie in with recent observation of declining shale oil/gas exploitation in the United States and concentration of rigs on the largest producing and easiest to access deposits. It is estimated that around half of all US shale oil wells become uneconomic at oil prices below $60 per barrel[13] and half of shale gas wells become uneconomic at gas prices below $4.85 per thousand cubic feet.[14]

What these figures show is that there can be no argument that fracking is going to create a profitable new industry plus ancillary manufacture and supply. The only possible reason for promoting it must be a facilitation of financial speculation. It is more about investment opportunities, short returns and manipulation of credit/debt in the financial sector or between/inside businesses, rather than actual contribution to the energy market or industry. This is an approach to economy that may sit well with the present UK government, but it is not thought the same is true of the Scottish government.

Of course looking at the global fossil fuel price is not entirely germane to the situation in Scotland. INEOS no longer claim that their activities in Scotland would add to energy stability; they admit that the end product here is a feedstock for their plastics industries.

The only possible inducement for the Scottish government to permit INEOS to lead this industry, is the company’s claim that if they are not permitted to go ahead, the lifetime of the Grangemouth plant may be shortened to the length of their current contract for importing shale gas from the United States.

Firstly, there is no evidence whatseover that this is the case and secondly, whilst the future of Grangemouth is an important consideration, it is not an adequate reason for permitting UOGE, given the resulting negative impacts across the economy as a whole.

3. THE JOBS QUESTION

3.1 How many jobs, really?

At a public meeting in Cumbernauld in 2015, INEOS were asked how many jobs could be created in Scotland and they stated a figure of 6,400. They then admitted they had arrived at this figure by simply taking 10% of the total UK-wide figure of 64,000 by Ernst & Young for the Institute of Directors (IoD).

The IoD is now using a different figure of 74,000 – does that mean there will be 7,400 jobs in Scotland?

This vagueness relating to actual jobs in shale is replicated in relation to Coal Bed Methane Capture (CBMC). The experience of the Public Inquiry at Falkirk was that the then licence holder Dart Energy was incapable of giving any realistic estimate of jobs potential of its CBM operation at Airth.

The widely quoted IoD report claims that each well pad would create 1,104 jobs; but Cuadrilla has said shale gas production in Lancashire would create a total of just 1,700 jobs in the County as a whole, and that is for one year only – it falls to under 200 just three years afterwards.

Any claims of “indirect jobs” created or “supported” or “induced” by any shale gas developments must be treated with extreme caution, as they may be counting jobs either already created or sustained in the area. In addition they tend not to differentiate between temporary and permanent jobs.

The UK government has a perfectly respectable figure for potential jobs in a report on the potential of shale gas commissioned from AMEC[16]. The Amec report says it could create 16,000 – 32,000 jobs in a high activity scenario but that, in a low activity scenario, 2,500 – 5,000 jobs would be created. This figure has mysteriously disappeared from the government’s discourse.

3.2 What jobs, who for, where?

Before any claim of economic benefit in terms of increased employment opportunities can be made an accurate break down of job roles, locations and length of time of employment is needed. None of that has been forthcoming from the UK government or any of the other widely-quoted studies.

Given this void in the debate, the Broad Alliance offers the following analysis:

In the planning phase the operation is typified either by office based roles such as legal and planning officers or by field roles such as geologists and engineers. These jobs will be in remote company offices, perhaps not even in the UK (quite apart from in the communities affected by UOGE).

During the drilling phase, field roles such as riggers, welders and surveyors, will last only a few months and certainly less than a year. Some suggest 9.8 fte jobs per well, but teams will move from well to well, drill site to drill site – the concern is that there is a great deal of double or even triple counting going on in these estimates.

It is also highly likely that wells will be constructed in a manner which facilitates remote monitoring, minimises on-site manpower and can be constructed by contract workers. This further distances the local community from the economic benefits of the wells and any jobs that they do create or sustain.

There is much talk of spending in the supply chain, and in Scotland this is a big issue because of the desperate crisis in the North Sea with people tempted to clutch at straws. But UOGE does not offer any long-term stability; in fact the crisis itself means that the UOGE licence holders will seek to drive their suppliers right down on costs, including numbers of jobs, wages, materials and safety.

There is some scope for jobs during the production phase (Petroleum engineers, Wellhead operators, Site managers) to be semi-permanent in communities surrounding the wells. However given the short lifespan of production it is clear that overall the companies, and their employees, will move on within a few years. The spend in the local economy and with supply companies will be temporary and minimal.

4. NEGATIVE ECONOMIC EFFECTS OF UOGE

4.1 The cost of effective regulation

The study Life cycle environmental impacts of UK shale gas [17] quantifies a range of overall lifecycle impacts of shale gas production in the UK and arrives at very unfavourable comparisons with other energy technologies and concludes that, for three types of impact (depletion of the stratospheric ozone layer, photochemical pollution, and terrestrial eco-toxicity), shale gas is ‘worse’ even than coal as an energy source for generating electricity; furthermore, uncertainties in input data mean that it might also be worse than coal for three additional impacts (on global warming, acidification, and human toxicity). This paper will form part of the Broad Alliance’s environmental case for a ban.

However, in this contribution to the economic impact assessment we want to refer to another inference the report makes, which is that if permitted in the UK, shale gas development must be subject to stringent environmental regulation, to ensure that it is only developed where it can be demonstrated to regulatory authorities “on a well-by-well basis” that impacts can be minimised.

The implications of “well-by-well” regulation are significant at the levels of intensity required if fracking is to be economic, as all the literature suggests.

In addition to wells, the Scottish Environment Protection Agency (SEPA) would need to monitor emissions of dangerous silica sand into the environment, so-called “fracking haze”; they would have to regulate the waste water management plans that the companies have put in place. They would also need to gather information on condensers, pipelines and other infrastructure.

We would argue that given the risks, the balance of regulation should not be in favour of self reporting by the industry or other tick box exercises. It would be crucial to have continuous field visits and local information gathering, in addition to office based, data-driven monitoring activities. Close liaison with local authorities would also be essential.

SEPA’s current business plan does not include any of this. Therefore we would estimate an increase in costs for SEPA of one third.

For the Scottish government this would mean additional grant-in-aid to SEPA of £12.8m per annum.

But this estimate is based on an assumption that we have made that the UOGE companies would make a parallel contribution that increases SEPA’s fee income by one third (£12.5m)

As we have seen no indication that licence holders would be prepared to pay such fees the whole cost would fall on the public purse - an annual cost of £37.9m per annum.

The onus is on the Scottish government to state the cost to the public purse of careful regulation of UOGE.

4.2 The cost of cleaning up

We would refer the consultants to the Broad Alliance’s statement on the Decommissioning, Site Restoration and Aftercare work stream and in particular its conclusion that:

“There are significant long term economic impacts in financing a robust monitoring regime in perpetuity. The Scottish government and local authorities have already had to invest public funds in dealing with similar problems and in fact the entire history of polluting industries is one of transferring clean up costs from the companies who have profited to the public purse.”

4.3 House prices and insurance

A survey of property professionals undertaken by The Ferret as part of its investigation into fracking in Scotland, revealed that the majority predict a negative impact on house prices[18].

John Rafferty, director of Kelvin Valley Properties, a firm which covers Scotland’s central belt, predicted a price fall of up to 10 per cent in any area where fracking gets the go ahead. He said: “It becomes harder to sell a property in those areas and as a result that will have a negative impact, something along the lines of seven per cent, ten per cent, I think that may be fairly realistic. It could be a little bit more than that – I certainly don’t think it would be much less than seven per cent.”

Alyson Lowe, managing director of Alexander Taylor estate agency based in Bonnybridge, near Falkirk, also estimated a 10 per cent price drop. She said the prospect of fracking is already deterring people looking for homes in the Central Belt.

“People are not really sure of what the consequences of that [UGOE wells] being in the perimeter, either under, around, beyond, or close to the property, and then obviously there’s the possible knock-on, or additional health issues as well,” she said. “I have had a few clients who are looking to purchase in areas where fracking is going to be taking place and they have not gone ahead with the purchase for that reason.”

Industrial installations, perceived environmental, health and safety risks, and the influx of haulage that comes with shale gas extraction, are factors likely to impact negatively on the property market, estate agents told the The Ferret.

A study by the US Natonal Bureau of Economic Development[19] shows those living within two miles of shale gas wells in the USA can expect house prices to fall by 24 per cent.

The UK government’s draft report on the impact of fracking in rural areas admits that: “Properties located within a 1-5 mile radius of the fracking operation may also incur an additional cost of insurance to cover losses in case of explosion on site.”[20]

Malton-based rural insurance broker McClarrons has seen an increase since last summer in inquiries from worried land and property owners in Ryedale, where North Yorkshire County Council recently gave planning approval for fracking at Kirby Misperton.

Chief among their concerns are damage to built property, contamination of groundwater and the potential for damage to land, crops and livestock.

“The danger is that many think their insurer will pay for all losses they suffer and then simply claim the money back from the operator, but it isn’t that simple,” said Becky Ireland, farm account executive at McClarrons.

“Most insurers do not recognise fracking as an ‘insured peril’ under a farm combined or similar policy, as opposed to traditional standard perils such as fire, theft or flood. Damage caused by earthquake and subsidence are generally covered under buildings insurance and if fracking led to these insured events, a claim would likely succeed. However, unlike home insurance, commercial buildings often do not have subsidence included as standard and cover may need to be added as an optional extra.

“Commercial property insurance wordings vary considerably and similar issues may arise in relation to damage occurring to land, for example contamination or damage to crops.”

Most home and commercial property insurance policies also exclude losses arising from pollution or contamination. Environmental liability policies also vary, with some excluding losses caused by fracking, said Miss Ireland.

Clean-up costs normally fall to the polluter but proving the source of the pollution may be difficult and costly, especially as it may occur over a long timescale and the polluter may no longer be in business or may not be worth pursuing financially.

Farmers and landowners need to review their cover and should consider cover for legal costs to pursue a damages claim and to deal with any environmental investigations should a loss occur, said Miss Ireland.

The Infrastructure Act 2015 gave landowners protection from liability for third party claims for loss or damage arising from fracking, for example where neighbours or their property suffer damage.

4.4 Impact on other business

The Government review of potential impacts on the rural environment says the evidence reviewed shows: “There will also be sectors that gain from the expansion of drilling activity but others that may lose business due to increased congestion or perceptions about the region. These behavioural responses may reduce the number of visitors and tourists to the rural area, with an associated reduction in spend in the local tourism economy.”

Potential tenants of business parks close to proposed well pads, will have concerns about increases in insurance costs, pollution and disruption. Levels of vacancies in business parks that may have enjoyed significant public subsidies in terms of cheap land, infrastructure and services, will rise.

There will be pressure to shift infrastructure investment to support this new industry; for example road capacity plans will need to be changed to support the massive increase in truck traffic in rural areas.

Adjacent to and near areas of active UOGE, it will be increasingly difficult to attract new industries, housing and tourism undermining local authorities’ plans for future.

Any cash payments offered by the industry to local authorities will be sucked into paying for a range of measures to try to mitigate the impact of the industry.

4.5 Additional costs to the NHS

We would refer to the Broad Alliance’s submission to the work strand looking at the impact on public health. The negative effects on health of UOGE would clearly lead to additional costs to the NHS. Any serious economic impact study must attempt to quantify those costs.

5. ECONOMIC BENEFITS OF A BAN ON UOGE

5.1 Communities can work on a better way forward

Scotland’s local authorities were not sitting around waiting for a new fossil fuel industry to come along. Many of the areas that will be impacted by UOGE are still struggling to overcome the negative impact of the previous fossil fuel extraction industries on their economic development (See Broad Alliance contribution to Decommissioning, Site Restoration and Aftercare and refer to the Scottish Vacant and Derelict land survey 2014).

These areas have forward-looking economic plans that do not include a further round of extractive industry. Broadly these are founded on the development of clean manufacturing, technological innovation, commercial and service industries, including food, support for agriculture and tourism. As an example, here is Falkirk District’s view of where it wants to be in 2034[22]

The area will have a dynamic, diverse, low carbon economy and there will be less out-commuting. There will still be a strong manufacturing base, with Grangemouth in particular having adapted to the new low carbon technologies and markets and Falkirk will have established itself as one of the main logistics and distribution hubs in Scotland as well as a key office location.

Strategic business sites… will be well underway supporting a wide range of new service and manufacturing businesses. The area will be prime destination for day and short-break visitors drawn by an attractive and accessible network of heritage, cultural and outdoor activities. The canals will be a particularly vibrant corridor, animated by a series of development nodes along their length and greater use of the waterspace.

This is West Lothian’s vision:

By 2024 West Lothian’s population will have grown and an improved employment position within a more diversified local economy will have been established. …Development will take place in a way that is sustainable, meeting the challenges of climate change and renewable energy, and sensitive to the area’s many built and natural heritage assets. At the same time development will be used as a vehicle to help regenerate communities and for improving the quality of life for all living in West Lothian.

East Dunbartonshire’s economic strategy has 3 objectives:

to support a diverse business base and in particular small business which has been a crucial driver for growth in the county; to support the development, diversification and growth of the town and village centres within East Dunbartonshire and capitalise on the area’s tourist, leisure and natural attraction and thirdly, to ensure that the key enablers of the economy are in place to support business to aid economic recovery and growth and economic prosperity providing access to employment opportunities. This last is about working with partners to support growth of business and social enterprise, investment in economic infrastructure and supporting skills training.

The development of UOGE has no place in any of these plans and would be detrimental to achieving them. It does not form part of the confident vision that local authorities, and their partners, have proposed. These local plans enjoy the support of the Scottish government.

By supporting UOGE, the Scottish government would be suggesting these plans are flawed, that they have no confidence in this vision, and instead we should shift focus on to a new extractive industry. Because permitting an entirely new and intensive fossil fuel industry must inevitably impact on and distort the vision of the future and the plans of both local and national government.

5.2 Global energy transformation

A transformation is taking place in the global energy market. A new report from [23] (May 2016) highlights a surge in investment in renewable energy creating147 gigawatts of capacity in 2015. Over 8 million people worldwide are now working in renewable energy. Investments in renewables during the year were more than double the amount spent on new coal and gas-fired power plants, according to the Renewables Global Status Report.[24] For a number of years, the global spend on renewables has been increasing and 2015 brought a new peak.

The falling cost of renewables has been key to this change and those companies and countries that invested in R&D, and manufacture, are benefiting.

Companies and countries that want to be in the forefront of future technology are looking at this change. For example Denmark (which on one day this year achieved 140% of its electricity needs from renewables) has adopted a new strategy which will make large investments up to 2020 in energy efficiency, renewable energy and the energy system (smart grid).

By 2020 approximately 50% of electricity consumption will be supplied by wind power, and more than 35% of final energy consumption supplied from renewable energy sources.

German energy giant E.ON has announced it is splitting off its assets in fossil fuel and nuclear from its work on renewables to create a whole new company with greater investment and focus. CEO Johannes Teysen explained:

“We are convinced that it’s necessary to respond to dramatically altered global energy markets, technical innovation, and more diverse customer expectations with a bold new beginning.”

5.3 Scotland’s transition

The Scottish government has established the Transition to a Low Carbon Economy as a priority in its Economic Strategy.[25] This stresses the opportunity to secure investment and jobs from this growing sector and ensure that the benefits of this transformational change are shared across the economy and communities.

There is a strategic commitment to shift North Sea activity out of oil and gas, as these dwindle, and into wind and tidal.

Actions include a £70 million National Renewables Infrastructure Fund to “help leverage private sector investment to develop the infrastructure across the country to support offshore renewables and ensure that Scotland becomes Europe’s green energy powerhouse”.

The aim is to position Scotland as “a world leader in low carbon activities - a sector which, with the right incentives, could support 130,000 jobs by 2020.”

This is a significantly higher estimate of job creation and sustainable economic activity than is being offered by the shale industry. It is a forward-looking solution to the current crisis in the North Sea oil extraction industry.

There is also a commitment to improve the energy efficiency of Scotland’s housing stock, another potential area for the creation of new firms and new jobs.

The Scottish Government approach emphasises the benefits of community ownership, localism, energy efficiency and accessibility of resources and information. It also recognises the profound social changes and opportunities that addressing issues of sustainable energy and infrastructure bring forth, including addressing fuel poverty and the potential to have energy policies that make this technology into a democratising and enfranchising force.

The Community & Renewable Energy Scheme[26] states that community ownership of renewable energy has multiple benefits, including revenues going into communities which can be spent for their benefit.

This suggests a very positive future for Scotland’s energy sector, in combining technology with the appropriate locations and allowing communities to lead projects and be given a voice throughout commercial developments, to ensure the best deal for communities. This is also a holistic plan to tackle greenhouse gas emissions at both the ‘supply’ and ‘demand’ ends of the chain, with exciting plans for decarbonising in transport and heating. The corporate-led profit-driven development of UOGE has no place in this strategy.

UOGE will lead to an inevitable shift in infrastructure investment, policy focus and other government support, moving our future in a different direction.

Sticking with the current de-carbonisation plan, and investing in it and communities’ part in it, can put Scotland at the front of the curve that is currently transforming global energy economics. UOGE is a backward-looking diversion, which we simply should not take.

This paper is submitted by the Broad Alliance, and we reserve the right to make any additional comments and revisions as new evidence becomes available to us.

References

[1] Please note that whilst the government’s consultants use the term Unconventional Oil & Gas with the acronym UOG, the Broad Alliance prefers the term Unconventional Oil & Gas Extraction with the acronym UOGE. The former is non-specific, the latter make clear this is a new extractive industry.

[23] REN21 is an international non-profit association and is based at the United Nations Environment Programme (UNEP) in Paris, France. REN21’s network structure is made up of the following agents: – the General Assembly – the Steering Committee – the Bureau – the Secretariat

Understanding and Monitoring Induced Seismic Activity

• better understand the levels of induced seismic activity that could be associated with unconventional oil and gas activities in Scotland; and

• better understand the robust regulatory and non-regulatory actions that can be taken to mitigate any noticeable effects on communities.

The Broad Alliance question the narrow remit of this research project and would like to know why geology/hydrogeology are not being assessed more broadly. We are also concerned about the possibility of reliance on the Independent Expert Scientific Panel Report on Unconventional Oil and Gas, published in July 2014. We would argue that this report is limited and now out of date. Furthermore it has been prepared by authors, at least some of whom have affiliations to the oil and gas industry.

We understand that BGS work on behalf of Government at UK level. We disagree with current UK Government policy on Unconventional Gas and hope the BGS report will be genuinely independent.

GENERAL COMMENTS

We understand that there are three types of unconventional gas extraction namely coal-bed methane (CBM), shale and underground coal gasification (UCG). Induced seismicity is generally associated with hydraulic fracturing which is essential for shale gas extraction but also commonly used in coal bed methane extraction.

Induced seismic events have been shown to occur as a result of unconventional oil and gas operations in both the USA and Canada[1]. In the past five years there has been a significant increase in the number of earthquakes occurring in some parts of North America. In the USA most of these events have been linked to wastewater injection into underground wells. However, very recent studies in Canada have revealed a high degree of correlation with the hydraulic fracturing process itself [2].

The geology of the UK is complex and the density of faulting in UK shale basins (including specifically the Midland Valley of Scotland) is very much greater than in US shale basins[3]. Earthquakes naturally occur along pre-existing faults where rocks are critically stressed. Seismic events induced by fracking are most likely to occur on these existing faults. To our knowledge no heavily-faulted area has ever been fracked with horizontal wells3. There is therefore good reason for concern.

UCG has also been proposed for the area around the Forth. This largely untested technology has risks of subsidence, seismicity, underground explosions and pollution to groundwater, soil and air. This process is now being banned in Queensland, Australia, following the disastrous pilot scheme in Chinchilla[4].

All three types of unconventional gas extraction could take place in Scotland, potentially in proximity to one another within the PEDL133 and Kincardine UCG licence areas.

In addition, the large number of former mine workings in Scotland further complicates matters as these have the potential for instability.

Faults and former mine workings also have the potential to provide pathways for migration of gases and fluids. This is addressed further in the Geology/Hydrogeology section below.

Mine workings

Many areas in Central Scotland lie in high risk areas, as defined by the Coal Authority, due to the presence of former mine workings [5]. The map in Figure 1 shows a section of the Central Belt, showing high risk areas in black hatching. Many of these areas are underneath housing, farms and infrastructure in heavily populated areas. There are also a substantial number of workings which are not known to the Coal Authority because they predate records or were conducted illegally. The Coal Authority defines “high-risk” to mean:

"The Development High Risk Area is the part of the coal mining reporting area which contains one or more recorded coal mining related features which have the potential for instability or a degree of risk to the surface from the legacy of coal mining operations. The combination of features includes mine entries; shallow coal workings (recorded and probable); recorded coal mining related hazards; recorded mine gas sites; fissures and breaklines and previous surface mining sites. New development in this defined area needs to demonstrate that the development will be safe and stable taking full account of former coal mining activities." [our emphasis]

We are very concerned about the implications of induced seismicity, particularly in areas where there is already a high risk of instability due to previous mining activities, and which are often highly populated.

Sensitive Infrastructure

Around the Forth, for example, are a number of sites of sensitive infrastructure including the industrial complex at Grangemouth (refinery, chemical works etc.), the Rosyth Naval Base, the two existing Forth bridges and the new crossing under construction, the Kincardine and Clackmannan bridges and surrounding motorways and railways. There are also a significant number of underground pipelines, particularly in the vicinity of Grangemouth and extending outwards to other parts of the country. These sites would be particularly sensitive to seismic activity and any damage could have serious consequences, particularly given the proximity to large populations.

The Coal Authority policy statement[6] for UCG states that licences will normally only be considered in areas where there are “no existing Petroleum Licences”, “no identifiable defence installations” and “no other major structures on the seabed”.

We question if this policy was properly taken into consideration in the awarding of the UCG licence at Kincardine.

Effects on communities

The Broad Alliance is unequivocal in its call for a ban on all forms of unconventional oil and gas extraction.

One of the aims of this research project is “to better understand the robust regulatory and non-regulatory actions that can be taken to mitigate any noticeable effects on communities”.

We consider this unsatisfactory in a number of ways.

Firstly the word “robust” is frequently used in relation to regulation, but we are not satisfied that regulation can, or will be, enforced adequately. An example of weak enforcement of regulation was demonstrated when damage occurred to a well casing during the 2011 earthquake at Preese Hall in Lancashire but was not reported to DECC until six months later[7]. There are numerous other examples of poor regulation and enforcement from around the world.

We are unhappy about the assumption that it is sufficient to “mitigate” impacts. Communities, we would argue, do not want to be impacted. In addition we would like to comment on the fact that only “noticeable” effects are being considered here. For one, “noticeable” is a highly ambiguous term, open to multiple interpretations (“noticeable” to whom and how?) and requires specific definition. For two, the allusion here may be intended to denote small earthquakes. However, we respectfully suggest that there are different kinds of impacts on residents and householders. Some are practical such as likely difficulties of obtaining house insurance (even before seismic activity actually occurs) as there is a perceived risk. House values are very likely to drop, potentially significantly[8]. This could prevent people from moving and trap residents, particularly those who have few resources. All these issues could further contribute to anxiety and stress that residents may experience from living in areas targeted for unconventional gas extraction.

A case can be made that the human rights of local residents would be infringed if unconventional oil and gas extraction was to proceed, including breaches of Article 1 of the first protocol (Protection of Property) and Article 2 (Right to Life) of the European Convention on Human Rights[9],[10].

Geology/Hydrogeology

The Broad Alliance is very concerned that a detailed study of geology/hydrogeology is not part of the research being carried out during the moratorium. We feel that this is a serious omission.

Dart Energy Public Inquiry

Evidence on geology and hydrogeology formed an important part of the Public Inquiry into Dart Energy’s proposals for Coal Bed Methane extraction at Letham Moss, Falkirk, which took place in March-April 2014. We request that the evidence from this inquiry is studied in detail. All submissions to this inquiry can be found on the DPEA website: http://www.dpea.scotland.gov.uk/CaseDetails.aspx?id=94326 . (DPEA case reference PPA‐240‐2032 and PPA‐390‐2029).

In April 2013 Falkirk Council appointed AMEC to carry out an independent review of aspects of Dart Energy’s proposed development, relating to the geological and hydrogeological environment and the assessment of environmental effects. AMEC produced six technical notes over a period of several months and held a number of technical exchanges with Dart Energy and their consultants, RPS. The AMEC review ended in November 2013 and concluded that two key issues remained unresolved, namely the possibilities of the proposed development drawing water from more than the coal seams, and also encouraging methane migration and promoting fugitive emissions.

Falkirk and Stirling Councils subsequently recommended refusal of planning permission on the basis that Dart Energy had failed to demonstrate that there would be no significant adverse environmental impacts.

AMEC’s lead technical reviewer on the project, Dr Shaun Salmon, presented evidence at the Public Inquiry as a witness for Falkirk Council. In summarising the AMEC review he states[11]: “...the RPS decision not to adopt a conservative approach to the impact assessment was problematic, especially the failure to reappraise the geology, faulting and mine workings in the area in sufficient detail, and to accept that, for the purposes of the assessment, faults should have been considered as potential pathways for dewatering and fugitive gas emission effects.”.

Dr Salmon noted that the proposed development could lead to dewatering of mine workings in the vicinity, causing them to start releasing methane – potentially a dangerous situation.

In their closing submission to the Public Inquiry[12], Falkirk Council highlighted particular problems with the Dart application including inadequate baseline data, lack of transparency in their assessment methodology, errors and inconsistencies in the understanding of the geological environment and an inadequate environmental impact assessment.

Concerned Communities of Falkirk (CCoF) appointed Prof. David Smythe to give evidence on their behalf.

Prof. Smythe’s evidence revealed errors and inconsistencies in Dart’s interpretation of the geology of the proposed development area (PDA). Faults were omitted from cross-sections and maps and Prof. Smythe considered this to be significant[13]: “All these faults are significant for consideration of the danger of fugitive methane emission and contamination of groundwater resources, and should not have been omitted from the proposals.”

Prof. Smythe’s evidence discusses the potential for faults to act as conduits for the upward migration of fluids, particularly fugitive methane. He concludes: “the numerous normal faults in the PDA are more likely to act as conduits for fluid flow and fugitive methane than to be barriers to flow. Furthermore, the conduit only has to extend in a vertical sense for 500 m to connect the target coals to the Secondary A aquifer of the Passage Formation. Within the latter, further upward migration will be probable, and once any such fluids reach the Lower Coal Measures there is an additional easy route for upward migrating fluids provided by the old mine shafts”.

In terms of fugitive gas emissions, Dart Energy claimed that this was not possible due to the development of a pressure gradient created during the dewatering process at the well head. However, concerns were raised by both AMEC and CCoF regarding disruption of this pressure gradient (for example by blocked laterals or cessation of dewatering)11,[14].

These concerns were shown to be justified by a recent report commissioned by the Queensland Department of Natural Resources and Mines. This report explains that free gas can potentially migrate large distances (up to10km)[15]: “Towards the margins of the gas field ‐ the pressure gradient is minimal and, if the gas has desorbed, the buoyancy forces may dominate. This can drive the gas vertically and laterally away from the gas field if a pathway exists (fugitive gas). Fractures or high permeability zones along a low dipping geological formation can easily provide such a pathway in the up‐dip direction.”

It should be noted that in the proposed PDA the up-dip of the coal seams are such that Dart Energy’s target seams – the Upper Limestone and Limestone Coal formations – come close to the surface beneath the communities of Cowie and Plean, around 2-3 km to the west of the wellheads. Here, there are extensive abandoned mine workings, and the end of one of Dart’s proposed horizontal boreholes came within a few hundred metres of these. In the context of the Queensland report on the extent of potential free gas migration, these should be considered negligible distances[16].

Regarding seismicity, Prof. Smythe presented a diagram (Figure 2) which showed that three earthquakes (from BGS data) had occurred in the immediate vicinity of the PDA in the last 30 years[17]. The largest of which was M = 2.6 (local magnitude), larger than the 2011 Blackpool earthquake associated with Cuadrilla’s fracking activities (M = 2.3). In his evidence at the public inquiry, Prof. Smythe clarified that while an earthquake may be unnoticeable, or trivial, at the surface it can do significant damage to underground workings, such as the deforming of steel casing of Cuadrilla’s well.

Recent research

An important, recent investigation from the USA (Llewellyn et al, May 2015), has shown clear evidence that fracking fluids and gas can travel several kilometres along fractures[18].

Prof. Stuart Haszeldine commented on this USA research in his submission to the Lancashire Public Inquiry[19]: “This area [Lancashire] is geologically complex, with many steep (near vertical) faults and fractures. This is like Pennsylvania, but even more fractured.” He concludes: “(A) Deep gas can migrate up to hit the drinking water table (B) Pre-existing steep fractures can be gas and groundwater conduits to move contamination vertically and laterally...”.

Prof. Haszeldine goes on to say: “It is clear that Fracking can impose large stress and fluid pressure onto natural underground systems, far in excess of the present natural conditions. Understanding of natural equilibrium hydrogeology at the present day is essential, but insufficient. Prediction of fluid movement during and after Fracking is of minimal use unless those extreme imposed conditions are simulated.”

Prof. Haszeldine recommended a moratorium to allow scientific investigations to be undertaken.

Prof. Smythe also commented on this recent research in his evidence to the Public Inquiry in Lancashire[20]. He states: “A new paper outlining the history and hydrogeology of a fracking-related contamination incident in NE Pennsylvania, USA, proves beyond reasonable doubt that faults and/or fractures played a crucial part in the contamination of drinking water wells and the Susquehanna River. Prior to this study, incidents of groundwater contamination had been attributed to faulty well construction, whereas faulted geology had always been exonerated.” Prof. Smythe recommended that both Cuadrilla’s planning applications in Lancashire be refused.

We conclude that the hydrogeology and geology of the UK is complex. Many aspects are not fully understood and require further research. However there is strong evidence to suggest that faults, other geological features and mine workings can act as pathways for the migration of fluids and gases.

We feel it is inappropriate to pursue the extraction of unconventional oil and gas in Scotland, given the multiple risks.

Comparisons with USA

In order to be economically viable the unconventional gas industry is necessarily intensive. Comparisons with the unconventional gas ‘boom’ in the United States should take account of the very different scale and nature of the landscape and population density here. Figure 3 gives some idea of the difference of scale.

Petroleum Exploration and Development Licence areas PEDL133 and PEDL162 cover a combined area of 729 km2 of the Central Belt of Scotland. According to figures quoted by INEOS[21] a typical ‘shale gas community’ of 100 km2 would contain around 200 wells – hence these two licence areas alone could contain 1400 shale gas wells.

In addition, PEDL133 (329 km2) contains an estimated 597 billion cubic feet (bcf) of CBM reserves which may require around 600 wells if it could all be exploited[22].

In our view, the likely impacts on communities and the environment would be entirely unacceptable.

Figure 3 Comparison of US shale basins with UK shown at the same scale.

Conclusion

Induced seismicity has occurred due to unconventional oil and gas operations and this is not only associated with wastewater injection, but with the hydraulic fracturing itself. The first UK experience of fracking for shale gas, in 2011, resulted in two earthquakes.

Unconventional oil and gas reserves are contained in the most densely populated parts of Scotland, in proximity with sensitive infrastructure. Seismic events could have serious consequences.

UK shale basins have a complex geology and are more densely faulted than those in the US. The Midland Valley of Scotland also has a large number of former mine workings which could be at risk of instability.

Faults, other geological features and mine workings can act as pathways for the migration of fluids and gases. We are very concerned that geology/ hydrogeology concerns are not being studied more broadly as part of the moratorium research process.

The evidence and concerns that we have presented here form one component of our insistence that unconventional oil and gas extraction should not be permitted.

This statement is submitted by the Broad Alliance, we reserve the right to make any additional comments as new evidence becomes available.

Addendum:

This paper was written before the significant evidence of fracking induced earthquakes in Oklahoma, which has led to the Oklahoma State Government ordering the closure of 37 wells.

[9] Gerard Brophy, “Legal Implications of Application by Dart Energy”, submitted to Falkirk Council in July 2013

http://www.faug.org.uk/campaign/legal-opinion

[10] The Bianca Jagger Human Rights Foundation, “A Human Rights Assessment of Hydraulic Fracturing and Other Unconventional Gas Development in the United Kingdom” http://eprints.uwe.ac.uk/26661/1/A-Human-Rights-Assessment-of-Hydraulic-Fracturing-in-the-UK.pdf

Decommissioning, Site Restoration and Aftercare

The Broad Alliance members are unequivocal in their call for a ban on UOG extraction. We therefore decline to make any suggestions or proposals about decommissioning because we do not believe this industry has any place in Scotland.

However, our concerns over the consistent failure to safely decommission dirty industries in Scotland is one component of our insistence that this industry should not be permitted.

As a former producer of coal, lead and of course, shale oil, Scotland has a legacy of dereliction, in all senses of the word.

There are significant long term economic impacts in financing a robust monitoring regime in perpetuity. The Scottish government and local authorities have had to invest public funds in dealing with this problem and in fact the entire history of polluting industries is one of transferring clean-up costs from the companies who have profited from the industry to the public purse.

The Environment Agency report Abandoned mines and the water environment[1]notes that 45 River water bodies in Scotland are at risk of failing to meet their Water Framework Directive targets of good chemical and ecological status because of abandoned mines. That is more than in any other part of Britain. These rivers carry some of the biggest discharges of metals such as cadmium, iron, copper and zinc to the seas around our shores. Seventy-two per cent of failures to achieve the cadmium quality standard in freshwater are in mined areas. In some areas, important drinking water supply aquifers are polluted or threatened by plumes of sulphate and chloride.

As well as environmental pollution, there is an economic legacy of under-development. Many decades after these industries made any contribution to the Scottish economy, the clean-up is far from complete.

The Scottish Vacant and Derelict Land Survey (2014) shows that 18% of the vacant derelict land in Scotland is still former extractive industry land.[2] This is down from a total of 35% in the 1990 survey, an indication of how difficult and expensive this process is. The survey also shows a clear correlation between deprivation and living adjacent or close to derelict land.

Most of the land referred to is in the Midland Valley, Fife and Lanarkshire. Around Canonbie are former lead mines. It is shocking to think that these are exactly the areas being lined up for UGOE.

20% of derelict land in Scotland is former Ministry of Defense Land. Here also it has been extremely difficult to convince the MoD to clean up after itself – the radioactive pollution at Dalgety Bay is a case in point.

The cost of cleaning up after the nuclear power station at Dounreay is £1.6bn and rising. Also included must be the costs of cleaning up all the other nuclear facilities now coming to the end of their useful lives.

20% of derelict land is former manufacturing sites, and here too we note that the cost of clean-up frequently ends up being financed form the public purse.

More recently, it has become clear that the Scottish government will have to pay for the clean-up costs of contaminated land at Dalzell and Clydebridge as part of the deal to sell these steel works to Liberty. Tata Stell will not be footing the bill.

The North Sea oil industry will cause pollution for decades, because as the drilling industry admits, all disused wells will eventually leak. The same is true of disused or abandoned fracking wells, as studies in the US shows.

The financial security mechanisms used in other fossil fuel industries have simply not worked, whether bonds or insurances or vain hopes of corporate social responsibility.